Marijuana entrepreneurship; industry discussion

[JAJT]

It's all but confirmed that it will be heavily controlled and distributed, so I'm wondering what tools/services might fit nicely in the equation.

Personally, I think a classy, upscale-looking brand geared towards the hard working 9-5 average Joe would do well.

The current pot culture revolves largely around the immature teenager and early adult. Tie dye, pot leafs, Marley, exotic glass blown pipes and wild looking bongs, etc...

When weed gets legal there will be the "hahaha, this is crazy" transition period but I honestly feel when the dust settles you'll have millions of "me too!" sellers competing in the "stereotypical pot culture" space and very few sellers creating high quality, simple, "working class" products. Adults looking to unwind after work don't want to feel they are "playing teenager" holding a giant multi colored glass bong or a pipe with a bikini clad lady on it.

Look at Vig's link to openvape - that is what I envision the future of weed to look like. Plain, black, classy, and in a word - "adult".

 

[MidwestLandlord]

Best bet in this industry is to design or redesign tools that producers use/need that can be patented. Weed is a commodity, you're at the mercy of a price setting market which has a tendency to go lower.

If you're going to make money in this business it won't be through the obvious grower or dispensary business model, but in the ancillary industries. Remember, gold rush, sell shovels.

Yep.

I sell a commoditized product (not weed, although I am somewhat in that space as well), and really the only way to make money is to sell to the people selling the commodity, and not sell the commodity itself.

With a commodity, retailers will come and go as the race to the bottom for pricing pushes out the weakest link. The chances of being a retailer, and not being on the list of "weakest links" is low, unless you have really deep pockets and don't mind losing tons of money while the market sorts itself out.

But if you sell to the retailers, sell to the businesses on the frontlines so to speak, they can come and go all they want, and you just keep selling to them. (just watch your account receivable's closely)

There's actually benefit to selling to retailers that have a high rate of bankruptcy and failure. That benefit is that turnover of new retailers drives sales.

Say there are 1000 retailers you can sell to. Once they bought everything they need, you're done selling. Bummer. But if half of them go out of business, and 500 new retailers pop up to take their place... that is 500 new retailers to sell to, even though the size of the market itself didn't change. If you sell equipment for instance, you could also get into the used equipment biz and keep the bankrupt retailers from competing with you there too...

So,

1) Sell the shovels
2) Buy back the used shovels and sell those too
3) Sell new and used shovels as gold miners come and go

 

[MJ DeMarco]

In 3-5 years, the new multi-millionaires and billionaires will be coming from two industries: Blockchain and Cannibis. Where there is change, there is big money to be made. And change is always happening.

 

[MJ DeMarco]

I can guarantee you in a few years, the newsworthy in-vogue millionaires will be marijauna entrepreneurs, just like the dot-com boom, the app boom, the self-pub boom, and the game boom.

 

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[AndrewNC]

you need to have a TON of capitol in the form of CASH

Banks that are federally regulated won't currently touch the industry so a lot of the dispensaries have to take in cash now.... no credit cards, and i forget about debit cards...Since many people don't carry cash anymore - I can see some form of opportunity there.

 

[Michael Burgess]

Huge potential in MMJ!

I dug this thread up because I'm doing some work with a fellow getting into the industry as a shovel-seller.

The person I'm working with started a tree farm on an amazing piece of property in my town, and I'm taking over that tree farm to expand my landscaping company. What's interesting is he's used fabric growing bags to produce his trees, which:

• Improve plants growth speed
• Improve the health of the plants root system
• Make the trees root ball significantly lighter and easier to manage
• Moderate the temperature of soil, instead of heating up too much (like plastic pots) causing plant stress

His plan is to manufacture and distribute these bags... primarily to MMJ growers. It looks like the cost on a wholesale basis will be pretty competitive with plastic pots, but offers much greater benefits to the producer. I'll be helping to reach out to growers, send samples, and see what the interest is like within the Canadian industry.

If anybody's interested, I'll follow with some updates!

 

[KCorbinWA]

I am currently in the Medical Marijuana Industry with my brother, who has been doing it for years here in WA. It is by all means a "feast or famine" industry. It takes a lot of different expertise from different people to keep the whole system working smoothly. You could get into growing, extracting or manufacturing extraction equipment, own a store front, own the garden supply store for the growers, so on and so fourth. All of which can lead to some VERY heavy pockets. I personally know someone that owns a dispensary and "dab bar" that brings an average of 20k in revenue DAILY. I also personally know someone in the garden supply store doing extremely well, and has opened multiple locations and about to venture into a side consulting business.

I recently went to the High Times Cup hosted in my area, it was jaw dropping how big people were making it. I even stood in the crowd while one local extract business was literally throwing out CASH and free product to the people, because they could.

 

[jon.a]

...much like when cig's were first made cool for women by that marketing genius who's name I can't remember back in the 1920's I think.

"Torches of Freedom"
Edward Bernays

 

[Anon1351z]

More glamour = more competition = harder to make money

However, it is a new industry. So lots of upside.

Personally though, I'd prefer to compete in industries where the competition is predictable and sucks.

I have always wondered why more people don't follow this. Getting into the hottest markets, whether it is Marijuana, SaaS, or whatever else essentially guarantees that you're competing against the smartest people around with unknown market variability.

I won't throw too many rocks from my glass house (currently made of web design and FBA), but my end game is doing HVAC for sea freighters or something.

 

[AgainstAllOdds]

Let's let this go back to being an industry discussion.

This.

Apologies for my comment on how it's easier to make money in a less glamorous industry.

Obviously someone's going to make money in cannabis - it's just likely harder than choosing another emerging market.

 

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[458]

Best bet in this industry is to design or redesign tools that producers use/need that can be patented. Weed is a commodity, you're at the mercy of a price setting market which has a tendency to go lower.

 

[Bamcis]

I think the majority of this thread has been about the growing and dispensary industry. There are a lot of other options out there as far as MJ goes. Over the summer and start of fall I've watched my KSHB stock hit +40% returns. These guys are huge in the packaging and branding for the MJ industry. If you've been to a dispensary (or smoked) you have seen one of their products. They produce child-proof containers, bags, and other smoking accessories. Just saying, you don't have to be a farmer or B&M dispensary to make money in this industry.

Another avenue down the cannabis road is Hemp. For those unfamiliar, hemp is like the sister plant of MJ and will NOT get you high... Currently there are some 20+ states that have approved the use of industrial hemp for growing, processing, and manufacturing. The federal government is also working on possibly reclassifying hemp. The US is one of the only developed countries not exporting/growing hemp. We stopped in the 20's-30's. I've been reading more and more about hemp lately and decided to invest in Hemp Inc. They should be opening the largest processing plant in North America soon (hopefully...) and this will be in North Carolina (one of the states who have approved industrial hemp). Just keep hemp in your minds too. It can be used to make all sorts of stuff. I would also imagine in the future it would be easier to operate a business using hemp rather than MJ.

Bamcis

 

[MidwestLandlord]

Don't get me wrong, I enjoy marijuana from time to time, but lighting something on fire and ingesting it cannot have ONLY positive consequences. I'd hate myself if I produced something that had adverse health effects for the consumer.

I know a guy that sells weed in Colorado. He owes me money haha.

He sells edible's like crazy, because of the unknown health effects of smoking weed AND because people want to be able to go back to work without smelling like weed.

Edibles and liquids (THC ejuice) is where most of his sales growth comes from.

Edit: Edibles are especially popular with women. Namely chocolate. A smart retailer would somehow get women to replace wine with weed for their evening routine. Huge market, much like when cig's were first made cool for women by that marketing genius who's name I can't remember back in the 1920's I think.

 

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[Michael Burgess]

For what it's worth....
(Someone who isn't me)'s first business was selling pot back in high school . It started out as a way to just help friends get bud without having to go through sketchy and unreliable suppliers... and then he realized it was a really simple way to smoke for free.

At some point, he had way more pot than he could smoke, which is when an entrepreneurial seed was planted.

In a lot of ways, it actually was incredible business training; finding and negotiating with suppliers, managing customers, marketing, understanding profit margins, logistics, and so much more. Obviously selling drugs is disconnected from real world business in a lot of ways, but selling pot was a fundamental step in his business progression.

It showed him that your income doesn't have to be related to your time, and that options existed beyond "just going to university and getting a job".

Don't sell or use drugs kids

 

[Ryan Howard]

I would assume that he means how saturated the market is there in California. I believe if he is just growing to sell to dispensaries then there is a good amount of people all doing the same thing. Which would mean that with let's say hundreds of people going to the dispensaries with product it's go ingredients to drive the price down. I feel like my future would be in the edible marijuana aspect. Whenever the laws allow it I would like to open a lounge that would allow customers to come and consume Marijuana and socialize, also while being able to order creative dishes all infused with marijuana. Would also like to have some entertainment on the weekends. "Bring your own bud" and see some live music

 

[bigred]

My brother-in-law is an electrical contractor here in Colorado and his current project is a 60 X 100 building for growing. I was talking to him the other day and he makes the operators pay cash every week. He said it was crazy the first time he got paid, he got an old paper sack full of cash. Like they say, sell shovels during a gold rush. I think there is a ton of opportunity in servicing this industry. If you were a contractor that specialized in the entire process from start to finish, whether it be growing, lighting, ventilation, or any other facet, you could make a ton of money.

 

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[Vigilante]

http://www.inc.com/will-yakowicz/open-vape-cannabis-oil-vaporizer-national-brand.html?cid=sf01002

The Marijuana Business That's Becoming a Brand Name
O.penVape is capitalizing on the popularity of its vaporizers to expand its reach and become a national brand.

 

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[Brian C.]

Buy some land and start a nursery. Once it's legal you're all set.

It's not that easy.

My state (MA) just legalized recreational marijuana, growing, etc.

On October 1st, our state will begin accepting applications for cultivators, product manufacturers, etc. It costs $3k to apply. That's right, $3k to even be considered. Applicants are sorted based on experience (think medical marijuana) and if they're lucky, they receive one of the 75 licenses available. There will be a maximum of 75 manufacturers until October 2018, and a max of 75 cultivators until October 2019. Oh yeah, and the license itself costs $15k.

Capital outlay is HUGE. Overhead, licensing, the property itself - it's a massive barrier to entry. So big in fact, that I've started to contact growers in Colorado, who might be able to offer advice as to the process and acquiring the necessary capital. Perhaps I'm wrong, but I don't think banks will be dishing out loans to commercial growers, especially with the federal position in limbo.

In the back of my mind though, I think marijuana could follow a path similar to tobacco. Since marijuana is classified as a schedule 1 drug, government testing is inconclusive. Don't get me wrong, I enjoy marijuana from time to time, but lighting something on fire and ingesting it cannot have ONLY positive consequences. I'd hate myself if I produced something that had adverse health effects for the consumer. But that's beside the point.

Bottom line, it's not that easy. But with big barriers to entry, come big opportunities for massive success.

 

[juan917]

It's not that easy.

My state (MA) just legalized recreational marijuana, growing, etc.

On October 1st, our state will begin accepting applications for cultivators, product manufacturers, etc. It costs $3k to apply. That's right, $3k to even be considered. Applicants are sorted based on experience (think medical marijuana) and if they're lucky, they receive one of the 75 licenses available. There will be a maximum of 75 manufacturers until October 2018, and a max of 75 cultivators until October 2019. Oh yeah, and the license itself costs $15k.

Capital outlay is HUGE. Overhead, licensing, the property itself - it's a massive barrier to entry. So big in fact, that I've started to contact growers in Colorado, who might be able to offer advice as to the process and acquiring the necessary capital. Perhaps I'm wrong, but I don't think banks will be dishing out loans to commercial growers, especially with the federal position in limbo.

In the back of my mind though, I think marijuana could follow a path similar to tobacco. Since marijuana is classified as a schedule 1 drug, government testing is inconclusive. Don't get me wrong, I enjoy marijuana from time to time, but lighting something on fire and ingesting it cannot have ONLY positive consequences. I'd hate myself if I produced something that had adverse health effects for the consumer. But that's beside the point.

Bottom line, it's not that easy. But with big barriers to entry, come big opportunities for massive success.

There's always a first step, which is learning how the process works.

 

[JAJT]

It's about to become legal here in Canada, federally and for recreation. This year.

Dispensaries are already jockeying for position and selling their product loosey-goosey to anyone who walks in (and not just medical, like they are supposed to until the law goes through). They've been getting shut down and raided left and right every week but I'm assuming they all want to gain market share before the flood and are taking that risk.

One thing I've seen people getting into are the extracts. Specifically stuff made with Butane. From my understanding you can make very similar products with CO2. I know for a fact they already do this with hops for beer (co2 hop extracts using basically the same method - hops are very closely related to cannabis). Personally I think if someone came in, advertised similar extract products made with harmless CO2 instead of a combustible and harmful gas as the solvent, and and sold it to the retail chains, you'd make a killing.

(I have no idea if CO2 extracts are already popular, I've only ever heard about the butane ones. I'm not really into the "weed scene" so to speak)

 

[AgainstAllOdds]

More glamour = more competition = harder to make money

However, it is a new industry. So lots of upside.

Personally though, I'd prefer to compete in industries where the competition is predictable and sucks.

 

[The-J]

The real money is likely in lobbying your state to pass laws that stifle competition and allow you to operate freely, whether as a retailer chain, a supplier, a supplier of tools, whatever.

If you can somehow nab yourself a government-enabled monopoly in this industry, then you're gold. You only need one state, too.

 

[argst13]

.Since many people don't carry cash anymore - I can see some form of opportunity there.

LOL, Yes a real opportunity for theft. In all seriousness, this is a major issue for dispensaries. They have to buy, sell, pay taxes, and payroll all with cash. It is totally a$$ backwards. Also, the feds want their tax money but will not honor any tax exemptions or write-offs because they still view them as "drug-dealers."

This is a market with huge upside, however, until the federal government eliminates prohibition, it would be wise to stay away from. IMHO.

 

[joncrx]

If you want to see the ultimate fast lane approach to this business, check out weedmaps.com

They get to sell advertising space, little to no liability, and they control the eyeballs of the consumers.

 

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[350z]

On an optimistic note:

I would love to see a part of the marijuana industry operate a way similar to that of the truffle industry. Definitely worth a watch:

If you were able to source the finest quality of bud, a plus if you can get it at a wholesale rate, and then make a few rounds to a few distributors (I would assume dispensaries that don't solely rely on their own grow). Of course, after that will be the consumers. Meaning that you will have a select list of clients, rather than 100s of customers.

You can easily net profit $100/lbs (buy from source - $1900/lbs, sell to distributors - $2000/lbs). In theory, if you have 5 recurring clients that need 5 lbs daily, then you are making $2,500 every day ($627,500/yr which is excluding weekends/holidays). Of course, this is the prices pre-tax, adjust for state to state taxes.

However, to be more realistic I would say that it may not be that prime right now. I do suspect in the future, just not in the near future. This is mainly due to the length of time the public will take to adjust to the idea. Right now we only have a few states that support recreational usage. Until we get a majority of public opinion positive, then it won't be as profitable.

Although, I hear the black market is still thriving. But I don't think that type of talk is allowed here.

 

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[IGP]

Find a method to offer credit card processing to the vendors and take a % of each transaction. No one offers credit card processing for these guys, so create a completely legal system that allows you to do so. Hard? Of course, lots of money to be made? Absolutely.

Need? Check
Entry? Check
Control? Iffy (laws and stuff)
Scale? Check, you can go huge with this.
Time? Once its implemented, you can sit on the beach sipping whatever people on the beach sip.

It's not hard... It's impossible. Banks can't touch it as long as it is a Schedule 1 classified drug.

This is the same reason that legal medical marijuana businesses are all cash based operations.

 

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[Brian C.]

I'd like share some of my opinions from my perspective.

1. In Colorado, I know of a Veteran run business that collects money for these dispensaries. The company only employs veterans. They are like the Brinks of marijuana. Guys pop out of an unmarked Suburban armed with AR15's, collect the money from the dispensary, and then bring it back to their company for safekeeping. Very lucrative given the current political and financial climate, however, not likely long-term as the financial fiasco will likely be sorted out eventually. Maybe?

2. My college had one of the best agriculture programs in the country. Many of the students I talked to that majored in Agriculture think of growing marijuana as a dream job. Some, not all. People involved in agriculture can see the opportunity in marijuana just as much as the businessman. They understand the plant and recognize its possibilities (medicinal, recreational, etc.). They know they will be a vital resource given the current movement towards legalization.

3. I think there is a MAJOR opportunity in growing. LED lighting has changed agriculture forever. Massive indoor growing facilities are now a possibility. I think you will see plants in addition to marijuana being grown locally by this method. Think of the growing demand for locally sourced food products. There will be a major opportunity here, as businesses find more cost effective methods to grow locally. Sourcing food is becoming less and less practical due to geographical distances; who wants their food in transit for weeks at a time? Solar has also reduced energy costs for these growing facilities.

New industries come with many possibilities, but always with more questions unanswered. The marijuana industry is the epitome of questions unanswered.

 

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[Richie Arnold]

This is definitely a growing business. Just this past decade a new way to smoke "dabbing" has started to become popular. Im sure plenty of businesses cashed in on the oil rigs you need to smoke the THC wax. There's so many trends and possibilities that could arise with the legalization.

 

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[Brian C.]

It's mind-numbing thinking about the possibilities in regard to marijuana.

I built and sold "stealth" grow boxes a couple years back. Essentially a regulated, silent, odorless environment where you could grow marijuana without anyone being the wiser. Yields in 4-5 month range. Sold a few on eBay, but ran into issues with shipping. Now that it's legal in MA, I'm thinking about operating again as a side business before it's too late (if not already).

This industry is about to sweep the nation (regardless of federal/state administration). As @MJ DeMarco said

I can guarantee you in a few years, the newsworthy in-vogue millionaires will be marijauna entrepreneurs, just like the dot-com boom, the app boom, the self-pub boom, and the game boom.

It's funny @MJ DeMarco because I was thinking the same thing the other day. It's the self-pub boom "domestic brewery" type deal all over again.

Surely, there will be members of this forum who'll become dominant forces in this industry (if not already).

 

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[MidwestLandlord]

FWIW I have a few friends who work at dispensaries, and I've been to a few myself. All that I know of accept card transactions as well. I'm not sure exactly how they process it but say you make a purchase of $46.xx they charge you for $50 and give you the change.

Really?

Why on earth would they increase the credit card sales arbitrarily when you pay as a percentage of the sale? It's usually against their merchant agreement to do that as well.

Weird. I've never seen this.